Pet Valu Holdings Ltd. ((TSE:PET)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Pet Valu Holdings Ltd. recently reported a positive earnings call, highlighting solid growth in revenue and sales. This growth was primarily driven by an expansion in their store network and success in digital channels. However, the company acknowledged challenges due to uneven discretionary demand and macroeconomic uncertainties, which are influencing consumer spending behaviors.
Revenue and Sales Growth
Pet Valu experienced a 4% increase in system-wide sales and a 5% growth in revenue during the third quarter of 2025. This growth was supported by momentum in same-store sales and strategic expansion efforts within their store network.
Store Network Expansion
The company opened 16 new stores in the third quarter, bringing their total to 849 locations across Canada. Pet Valu remains on track to open 40 new stores by the end of the year, reinforcing their commitment to expanding their market presence.
Digital Channel Success
Pet Valu’s digital channel continues to thrive, with promotional events such as the 20% off AutoShip discount significantly boosting active subscriptions and contributing to overall growth.
Supply Chain Transformation
The completion of the supply chain transformation, highlighted by the new Calgary distribution center, has enabled Pet Valu to achieve year-over-year leverage in distribution costs, setting a strong foundation for future profitability.
Operating Expense Management
Through effective management, Pet Valu identified opportunities to realize savings in operating expenses, which helped offset inflationary pressures. This resulted in a sequential improvement in adjusted EBITDA margins to 22%.
Uneven Discretionary Demand
The company continues to navigate challenges posed by uneven discretionary demand, which has impacted overall sales growth and consumer spending behavior.
Challenges in Hardlines Sales
Progress in hardlines sales paused during the third quarter, reflecting consumer caution in discretionary spending amidst ongoing economic uncertainty.
Macroeconomic Uncertainty
Macroeconomic uncertainty remains a concern, as it continues to weigh on consumer spending. Pet Valu anticipates that uneven discretionary demand may extend into 2026.
Forward-Looking Guidance
Looking ahead, Pet Valu has refined its outlook for 2025, projecting revenues between $1.175 billion and $1.185 billion. This forecast is supported by the opening of approximately 40 new stores and a same-store sales growth of around 2%. The company expects adjusted EBITDA to range from $257 million to $260 million, with adjusted net income per diluted share between $1.63 and $1.66. Capital expenditures are anticipated to be around $45 million, with a free cash flow conversion target of roughly 40% of adjusted EBITDA.
In summary, Pet Valu Holdings Ltd. has demonstrated robust growth in revenue and sales, driven by strategic expansions and digital success. Despite facing challenges from uneven discretionary demand and macroeconomic uncertainties, the company remains optimistic about its future prospects, supported by a refined outlook for 2025 and strategic investments aimed at long-term growth and profitability.